Barr DOJ Weaponized Antitrust To Launch Flimsy Inquiries Into Legal Weed Companies

from the ill-communication dept

We've long noted how Bill Barr, a former Verizon lawyer (and forefather of our domestic surveillance apparatus) isn't a big fan of this whole "rule of law" thing. It had already been established that he'd been wielding the DOJ's antitrust authority as a personal Trump bludgeon, using it to launch capricious, unnecessary probes (the whole short-lived and nonsensical inquiry into California automaker emissions), and prop up the interests of companies willing to kiss Trump's ass voraciously enough (the decision to rubber stamp the Sprint/T-Mobile merger while ignoring all objective data).

But in testimony this week before Congress, longtime agency employee turned whistleblower John Elias made it very clear that it's all dumber and worse than we had previously known. The cornerstone of his testimony (pdf) involved noting that Bill Barr and DOJ antitrust boss Makan Delrahim routinely ignored staff advice and waged all manner of vindictive, facts-optional, politically motivated assaults on industry under the auspices of "antitrust."

Barr's biggest target appears to be the legal marijuana industry, investigations into which consumed upwards of 29% of agency resources. In many instances, he notes, Barr's DOJ launched inquiries into marijuana companies and smaller mergers that in no way posed competitive or monopolistic threats. In many instances, the merging companies didn't even compete with one another. Yet the inquiries pulled agency resources from investigations into, you know, actual monopolies:

"At one point, cannabis investigations accounted for five of the eight active merger investigations in the office that is responsible for the transportation, energy, and agriculture sectors of the American economy. The investigations were so numerous that staff from other offices were pulled in to assist, including from the telecommunications, technology, and media offices.

Reminder: most objective experts noted that the T-Mobile Sprint merger was a terrible idea, inevitably resulting in less competition, higher prices, and layoffs. The DOJ not only ignored its own staff's advise to block the deal, Delrahim personally helped usher the deal to completion via his personal email and text messaging accounts. Every last shred of objective data showing the deal was a bad idea was ignored. What wasn't ignored? Small legal weed companies that were targeted simply because King Dingus (and likely evangelicals, and the pharmaceutical and alcohol lobby) don't much like legalized marijuana.

In his testimony, Elias makes it clear that Delrahim's staff are frequently and fully aware that these inquiries are baseless bullshit:

"The head of the Antitrust Division, Assistant Attorney General Delrahim, responded to internal concerns about these investigations at an all-staff meeting on September 17, 2019. There, he acknowledged that the investigations were motivated by the fact that the cannabis industry is unpopular “on the fifth floor,” a reference to Attorney General Barr’s offices in the DOJ headquarters building. Personal dislike of the industry is not a proper basis upon which to ground an antitrust investigation.

You don't say. Elias, throughout his testimony, also very politely makes it clear that the DOJ's antitrust responsibilities have been hijacked to cater to the daily Trump brain fart du jour, perfectly represented by the dumb and now defunct California emissions effort:

"When news of the investigation became public and spread within the Antitrust Division, many of my colleagues, who are familiar with the “state action” defense as well as the NoerrPennington doctrine, questioned why the Division was investigating conduct that appeared to be prompted by a state regulator. In response to criticism of the investigation, on September 11, AAG Delrahim circulated an all-Division email in which he stated that he “strongly believe[s] that the Division has a basis to investigate and that the standards for opening a preliminary investigation were more than satisfied based on the available facts.” AAG Delrahim simultaneously announced an all-staff town hall meeting for September 17. There, he stated that staff was not rushed into initiating the investigation. That representation conflicted with the recollection of a staff member who had assisted with the opening memorandum."

Keep in mind, this is the same Barr DOJ many journalists and "experts" somehow believe will not only conduct a fair inquiry into giants like Google, but will deliver valid, good faith remedies for the very real problems Google helped create (as opposed to say problematic remedies focused on aiding aspiring Google ad competitors like AT&T, Comcast, and Verizon).

Like so many policy subjects (the environment, encryption, an open internet, police brutality, on and on and on...) Trump arrived at the worst possible time for a litany of reform efforts. That's doubly so for the government's antitrust authority, which has been steadily eroded for years and is in dire need of meaningful reform in the Amazon era. Instead we get... whatever the fuck this is supposed to be.

Filed Under: antitrust, automobiles, doj, marijuana, politics, retaliation, william barr

Auto Industry's Own Study Demolishes Case For Car Safety Harmonization In TAFTA/TTIP

from the putting-lives-in-danger dept

Back in February, we suggested that TAFTA/TTIP should really be called the "Atlantic Car Trade Agreement," or ACTA for short, since nearly 50% of the claimed boost to transatlantic trade that would accrue from TTIP consists of swapping vehicles between the US and EU. The claim was that, since cars made in the US and EU were equally safe, there was no good reason why they could not be sold on both sides of the Atlantic. According to an important article in The Independent, proponents of this view were so confident that US and EU safety standards were broadly similar that they commissioned a report to prove it, with the aim of using it to bolster the case for harmonizing car safety standards in TAFTA/TTIP:

The Washington-based Alliance of Automobile Manufacturers (AAM) sponsored the research, announced in a joint press release last year alongside the European car lobby ACEA and the American Automotive Policy Council.

So that there could be no question about the validity of the results, they asked some of the world's top people in the field to participate:

Independent experts from the University of Michigan Transportation Research Institute and the SAFER transportation research centre at Chalmers University of Technology in Gothenburg, Sweden, carried out the study. They are two of the leading traffic safety research centres in the world. Experts in France and at the UK’s Transport Research Laboratory were also involved.

Here's what the industry's report found:

The research actually established that American models are much less safe when it comes to front-side collisions, a common cause of accidents that often result in serious injuries.

The following is no surprise, then:

The findings were never submitted -- or publicly announced -- by the industry bodies that funded the study.

Putting a brave face on things, a spokesperson for the US Alliance of Automobile Manufacturers told The Independent:

"There is much credit to be given for the historic efforts made in this study, and we fully support the methodology for comparing and analyzing U.S. and EU crash environments and vehicle performance. "

While the European car manufacturers association said:

"ACEA remains confident that regulatory convergence can be achieved in TTIP while maintaining the current high level of safety performance in both the EU and the US"

But the European Transport Safety Council (ETSC), the independent organization that advises the European Commission and the European Parliament on road safety, is not so sure. Its executive director, Antonio Avenoso, is quoted as saying:

"This study shows that EU and US trade negotiators would potentially be putting lives in danger by allowing vehicles approved in the US to be sold today in Europe and vice-versa. … Clearly without much more research and analysis, including vehicle safety standards in the TTIP agreement would be irresponsible."

The trouble is, if car safety standard harmonization is not included in TTIP, there won't be the big boost to trade that is predicted to come from increased transatlantic vehicle sales. And without that big boost, TAFTA/TTIP's benefits, never very big in the first place, become even more negligible. Sounds like it's time to slam the brakes on ACTA….

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: automobiles, cars, eu, international agreements, safety standards, tafta, trade, trade agreements, ttip, us

FTC Smacks Down Michigan For Trying To Ban Tesla Sales: Didn't We Already Warn You About This?

from the go-go-ftc dept

A little over a year ago, we noted how nice (if somewhat surprising) it was to see the FTC take a stand for Tesla and its direct sales model. Just as states -- generally under pressure from auto dealers who hate competing with Tesla -- were starting to explore laws to ban Tesla from those states, the FTC noted that it felt many of these plans were designed to hold back competition and innovation and it was prepared to step in. A year ago, it said things like this:

Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries.

Shots fired. In response to this (and public outcry), New Jersey and some other states appeared to back down. But not Michigan, home to the big US automakers, who aren't at all happy with this new upstart competitor from California. Last fall, Michigan passed a law that made it even more difficult for direct sales like Tesla. The FTC didn't do anything specifically about that (yet), but there's a new bill under discussion in Michigan that would carve out an exception to the new ban on direct sales of vehicles, but just for a new category called "autocycles," such as those from Elio Motors. The FTC used this opportunity to question why there's a ban on direct sales of vehicles in the first place.

In a letter commenting on the Michigan proposal, FTC staff supports the movement to allow for direct sales to consumers—not only Tesla or Elio, but for any company that decides to use that business model to distribute its products. Blanket prohibitions on direct manufacturer sales to consumers are an anomaly within the larger economy. Most manufacturers and suppliers in other industries make decisions about how to design their distribution systems based on their own business considerations, responding to consumer demand. Many manufacturers choose some combination of direct sales and sales through independent retailers. Typically, no government intervention is needed to augment or alter these competitive dynamics—the market polices inefficient, unresponsive, or otherwise inadequate distribution practices on its own. If the government does intervene, it should adopt restrictions that are clearly linked to specific policy objectives that the legislature believes warrant deviation from the beneficial pressures of competition, and should be no broader than necessary to achieve those objectives.

Opening the door by a crack is a step in the right direction, and we urge policymakers in Michigan to take this small step. But beyond company-specific fixes lies a much larger issue: who should decide how consumers shop for products they want to buy? Protecting dealers from abuses by manufacturers does not justify a blanket prohibition like that in the current Michigan law, which extends to all vehicle manufacturers, even those like Tesla and Elio who have no interest in entering into a franchise agreement with any dealer.

The full letter is below -- and it does a nice point-by-point debunking of the laughable arguments by those who insist bans on direct sales to consumers are necessary. Here's just a snippet:

Those who support a blanket prohibition on direct manufacturer sales have made a number of arguments that FTC staff find unpersuasive. Perhaps the central concern reflected in the current laws regulating the manufacturer-dealer relationship is that government intervention is required to protect independent dealers from abusive behavior by their suppliers. But a blanket prohibition of direct manufacturer sales is not a narrowly crafted provision to protect franchised dealers from abuse in their franchise relationships. Such a prohibition is categorical, going well beyond the many other statutory provisions that protect dealers from such abuse. It extends to every entity engaged in manufacturing, assembling, or distributing new motor vehicles, even a manufacturer that has never entered into a franchise agreement.

Advocates for existing dealers also argue that manufacturers that sell directly to consumers will not provide them with adequate service. This argument presupposes that automobile manufacturers in a competitive environment will act contrary to their economic self-interest. If consumers greatly value post-sale service and would be unlikely to purchase or recommend any automobile without a reasonable assurance of quality future service, then any manufacturer will have an incentive to supply such service or else see its sales decline to the benefit of its rivals. This competitive pressure is a strong motivation for manufacturers to either provide good service themselves or continue to contract with an independent service provider, such as a dealer, to do so.

Finally, advocates for a categorical ban on direct sales argue that direct-selling manufacturers would charge higher prices to consumers. In their view, consumers benefit from the “intrabrand” competition between dealers of the same brand of vehicle. In other words, rival dealers in the same area that sell the same make and model of car compete for business and competition between them can lower prices for car buyers. Manufacturers, they maintain, would not be subject to the same competitive pressures.

This view is inconsistent with modern economic learning and with the Supreme Court’s widely accepted observation that strong “interbrand” competition—competition between rival manufacturers—can suffice as a source of downward pressure on price. Manufacturers in a competitive market face acute pressure to keep prices low to keep buyers from shifting their purchases to a competing manufacturer’s product. Thus, forcing firms to use inefficient distribution methods can result in higher prices and other forms of consumer harm. As described above, this is not merely a theoretical possibility. Statistical evidence shows that states that have placed strong limitations on gasoline refiners’ ability to operate their own retail outlets tend to have higher prices than those that allow refiners to use whatever combination of dealer and company-operated stations they prefer.

A continuing ban on direct sales by manufacturers perpetuates the current closed system of motor vehicle sales in Michigan. The system limits competition among existing, well-established manufacturers, all of whom must sell through the established network of independent auto dealers. A direct sales ban deters experimentation with new and different methods of sales by current auto manufacturers, and also by future entrants to the market. Michigan’s consumers are paying the price of such a dictate. The essential mechanism that drives markets—the interaction between the supply by manufacturers and the demands of consumers—is being curbed. The market is less responsive to consumer preferences and less innovative in anticipating their evolving needs.

It's nice to see the FTC continuing to monitor this situation and to speak out against clearly anti-competitive moves.

Filed Under: automobiles, cars, direct sales, ftc, michigan
Companies: elio, tesla

Why We Should Rename TAFTA/TTIP As The 'Atlantic Car Trade Agreement'

from the we-could-call-it-'ACTA' dept

When TAFTA/TTIP was first announced, David Cameron said it would "have a greater impact than all the other trade deals on the table put together." We were repeatedly assured that it would boost both the US and EU economies significantly. But when people started looking at the European Commission's own projections for TTIP (pdf), they found that the reality wasn't so impressive. Here's the economist Dean Baker, in a post entitled "Why Is It So Acceptable to Lie to Promote Trade Deals?":

The most widely cited projections for the growth impact of the TTIP are from the Centre for Economic Policy Research [CEPR] in London [in a study paid for by the European Commission] which shows the pact leading to an increase in GDP of 0.4 percent in the U.S. when its effects are fully felt in 2027, and 0.5 percent in the European Union. The analysis explicitly says that it will not lead to more jobs since the models are full employment models. It may lead to somewhat higher wages, but it is not a way to employ the unemployed. Furthermore, the discussion notes that in the transition, some workers may end up unemployed as the economies adjust to the new rules.

Implying that a deal that raises GDP by 0.4 or 0.5 percent 13 years out means "job-creating opportunities for workers on both continents" is just dishonest. The increment to annual growth is on the order of 0.03 percentage points. Good luck finding that in the data.

Recognizing that claims of substantial growth don't stand up to scrutiny, boosters of TTIP in Europe have resorted to a fallback technique: anecdote. If you can't prove something is good in general, show that it will be good for someone -- anyone -- and then extrapolate. Of course, that means you need to find an example of an industry that would definitely benefit from a US-EU trade agreement. An EU document on regulatory harmonization (pdf) from September 2013 gave a strong hint of which that might be:

The safety regulations that apply to cars are different in the US and the EU -- even if the end result is comparable levels of safety. In fact, it's already possible to drive some US- approved cars on European roads, under a special European approval system. Through TTIP, the Commission would like regulators to formally recognise that important parts of our two regulatory systems are broadly the same in safety terms.

Later in the same document we read:

Electric cars offer great potential to tackle climate change and pollution while boosting growth. Many companies on both sides of the Atlantic already sell them. Making them practical however will require new infrastructure as well as technologies and standards to ensure they are safe. That is why EU and US regulators and standard setters on both sides of the Atlantic are getting together early in this process to try to find common solutions that would allow for a real transatlantic market.

And then:

One example is the whole area of car safety already mentioned. The political choice in this kind of regulation is that the car has to be safe. For example, doors need to be strong enough to withstand impact and airbags need to function perfectly.

It is striking how the anecdotal stories about the various ways in which the automotive industry would benefit from TAFTA/TTIP have become even more widespread recently. Here's the British MP John Healey, one of the main cheerleaders for TTIP in the UK, writing in October 2014 about the "potential gains" of the agreement. Guess which example he chooses?

Take the car industry -- a British success story; supporting hundreds of thousands of good manufacturing jobs across the country. Eight out of ten cars made in the UK are sold abroad, but we currently sell far fewer than we could to the US because of different regulatory rules. This needn’t mean standards are higher or lower. Just as we drive on the left and they on the right, some regulations are not better or worse, just different.

Here's the EU Commissioner for Trade, Cecilia Malmstrom, speaking to the European Parliament's trade committee in December 2014:

Take cars, we could look at the differences in our car crash tests or the way we check if the seat covers are flame-resistant. Reconciling small differences like these, without compromising on safety, would be a huge step forward.

A recent video from the German industry association BDI extolling the virtues of TTIP for small and medium-sized companies uses two examples -- one of which is cars. And here's a video from BBC News which is all about the fact that TTIP will make it easier to sell European products in the US, using cars as its example. The main CEPR study on the economic impact of TTIP does, indeed, predict that car sales will increase. In fact, as Martin Whitlock has noted, that boost to transatlantic trade in cars contributes half of TAFTA/TTIP's total projected uplift to economies:

Cars form a big part of the E.U.'s case for TTIP. They account for 47% of the increase in exports and 41% of the increase in imports in the best case scenario, with well over three times as many vehicles braving the Atlantic storms in one direction or the other than at present.

Since the gains for this industry are expected to be so large, and those for other industries so small, why not drop all the contentious stuff that threatens to derail the whole deal, and concentrate on cars? In any case, it would be more honest to rename the TTIP proposal as the "Atlantic Car Trade Agreement," since that's what it is really about. We could even call it "ACTA" for short.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: automobiles, cars, regulations, tafta, trade agreements, ttip

DailyDirt: A Car Designed For The Average Consumer

from the urls-we-dig-up dept

American highways are slowly filling up with Crossover vehicles that drive like a car but have some of the height and space of an SUV. Sedans still outnumber Crossovers, but this non-car-non-SUV segment is growing rapidly. The Toyota RAV4 came out in 1994, but in 1991, a car design no one of a certain age will ever forget made its debut on The Simpsons. The Homer will have the last laugh. Here are some links to prove it.

• A real-world version of The Homer raced in the 24 hours Of LeMons in 2013. It finished in 5th place, but it didn't fully capture the essence of The Homer. [url]
• If you missed the episode "Oh Brother, Where Art Thou?" when it first aired, you can read up on the specs of The Homer on The Simpsons Wikia page. The car was built by Powell Motors (owned by Homer's half-brother Herb), and ultimately ruined the fictitious Detroit automaker. [url]
• The Homer was actually ahead of its time in some ways, sorta. No soundproof bubble domes for kids yet, but active noise cancellation and some child safety restraint systems might be a step in that direction. [url]

If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.

Filed Under: automobiles, cars, crossover vehicle, simpsons, suv, the homer
Companies: toyota, wikia

Do You Really Want Your Car To Be A Rolling WiFi Hotspot?

from the might-lead-to-some-other-problems dept

Apparently Chrysler is looking to turn your car into a rolling WiFi hotspot, allowing you to connect to the internet both for the sake of accessing information, but also for providing it (such as traffic info). Of course, automakers have talked about internet access in cars before, but it hasn't gone very far -- so unless you brought your own EVDO card, you weren't doing much. But is there really a strong demand for such things? As some analysts note, it seems like the automakers may be "leapfrogging the market," when they should be focused on making cars work better with the gadgets we already have. This is a problem that has come up before. Automakers love to build new technology into their cars in order to control the experience, but that's not what consumers want. Having an MP3 player is nice, but it's easier if you can just use your iPod. Having a built in GPS system is cool, but the new Garmin has a lot more features. Working with consumer electronics devices that people buy seems like it may be a lot more sensible than trying to recreate the wheel. And, then, of course putting WiFi connectivity in cars may eventually lead to xkcd-style scenarios:

Filed Under: automobiles, cars, wifi hotspot
Companies: chrysler

The Buzz Over New Battery Technology... And The Questions Raised By Its Patents

from the aren't-patents-supposed-to-tell-you-how-these-things-work dept

The Associated Press is running a story that's getting some buzz about the venture capital-backed secretive startup EEStor, who claims to have created a technology that can replace electrochemical batteries for things like automobiles. According to the article, if the technology worked as planned, it could mean the ability to create an electric car that would need a five minute charge and could then run for 500 miles without gasoline. Impressive, right? But, the claims seem so outlandish that they certainly should raise the inner skeptic in many people. The technology could very well be real, but there should be a bit more proof before everyone just believes it. And reports of delays in getting the technology to actually work are hardly confidence boosting.

However, what's most interesting about the AP coverage is that it focuses in so much on the patent that EESTor holds on this technology. However, it does quote a few skeptics who question whether or not anyone can actually make what's described in the patent work. That's should (once again) highlight how pointless these types of patents are. People often point (mistakenly) to the benefits of patents "disclosing" new technologies -- and, indeed, the point of patent disclosure is to reveal the idea to the level that someone skilled in that field can use the patent to recreate the invention described. However, in these days of overly broad or speculative patents, it's quite rare that a patent provides the information needed to actually create what's claimed -- and that's clearly the case with EEStor's technology. Since no one, not even EEStor or its partners, seems to be able to actually make the technology do what the patent claims it can do, shouldn't that call into question the validity of the patent itself?

Filed Under: automobiles, batteries, internal combustion, patents